A recovering oil price, which has rebounded from lows of around US$30 a barrel a year ago to US$40 and above in 2017, along with the arrival of a pro-oil administration in the White House, has supported a cautious rebound in the M&A market.

Midstream, Permian and PE

The midstream sector especially—processing, transportation and storage companies—has outstripped other subsectors of the industry. Elevated transaction levels in the midstream sector reflect moves to achieve greater scale, to capture geographical trends and maximize positions in the right basins.

In particular, the Permian basin in West Texas has seen a flurry of deals as companies vie for influence in the oil-rich area, which boasts some of the lowest drilling costs in the country.

A mixed picture

Although deal figures are positive, there are signs the sector hasn't fully recovered. The two largest deals of the quarter, Oneok Inc.'s US$17.2 billion acquisition of a 60 percent stake in Oneok Partners and Williams Companies' purchase of a 32 percent stake in Williams Partners for US$11.4 billion, were essentially ownership model restructurings.

"A lot of the deals are not driven by factors that normally spark M&A, like fundamental growth and expansion," says White & Case partner Gregory Pryor.

The Trump effect

The presidency's strong support for oil and gas has boosted dealmaker confidence. "There is without a doubt confidence and optimism in the industry," Pryor says. "The oil price has stabilized, the Permian basin is busy and there is going to be less regulation."

But without a sustained increase in oil price, producers in the US have little incentive to ramp up output, reducing the need for greater capacity. And despite President Trump's change of approach, the regulatory question looms large: Operators know that plans for new infrastructure will be potentially delayed by time-consuming legal action from environmental campaigners.